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Alpha Hospitality Increases Casino Interest

13 August 2001

NEW YORK--(Press Release)--Aug. 13, 2001--Alpha Hospitality Corporation (NASDAQ - ALHY; BSE - ALH; WARRANTS: OTCBB - ALHYW; BSE - ALHW) (``Alpha'') announced today that it has reached a definitive agreement to acquire the casino and racetrack interests of Watertone Holdings, LP in Catskill Development, L.L.C. , whose subsidiary is the owner and operator of the Monticello Raceway in Monticello, New York and is also pursuing a Native American casino to be built at the Raceway.

When the transaction is completed, Alpha's interest in the Casino component of Catskill's business will increase from 40% to approximately 57% and its interest in the horse racing component of Catskill's business will increase from its current 25% to 50%.

Also as part of the transaction, two principals of Watertone will be employed directly by Alpha to actively assist in directing future activities, including efforts to raise additional debt and equity funds, as well as continuing to pursue, through its Catskill affiliates, Alpha's efforts to bring the Casino's development to a successful conclusion.

An Alpha spokesperson said the acquisition would be effectuated by the issuance of 850,943 shares of Alpha's common stock. As part of the transaction, the principals, subject to certain performance requirements, will be entitled to acquire an additional 503,073 shares of Alpha's common stock at an exercise price of $24.91. The acquisition is subject to approval by Alpha's Board of Directors, shareholders and other governmental approvals.

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